Analysts Forsee Sony as Leader

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Analysts see Sega's merger with Bandai as reinforcement of Sony's dominance

By IGN Staff

Despite Nintendo's record-breaking introduction last year of Nintendo 64, the most powerful 64-bit system on the market, competitor Sony is likely to continue pummeling its rivals in the battle for the home videogame market -- despite the planned merger of one of its chief rivals, analysts say.

Armed with commitments from developers of Japan's most popular game software, Sony's PlayStation is seen keeping its edge over rival machines from Nintendo and another leading videogame maker, Sega, which, on Thursday announced plans to merge with Bandai in October. Although a latecomer to the market, PlayStation currently holds nearly a 50% share in the worldwide market for game machines of 32 bits or more, while Sega and Nintendo respectively hold 32.3% and 18.0%.

"One of the reasons that PlayStation has been selling so briskly is that it offers a wide variety of games," said Masahiro Ono, an analyst at Credit Lyonnais Securities.

Although analysts said PlayStation's market dominance is likely to be reinforced by its success in the past year in luring major software houses to its camp, this is a year in which Nintendo will introduce a conservative guess of 50 games into its library, filling in key genres, like driving, sports, and fighting. But the loss of long-time loyal companies like Enix and Square -- which haven't said they wouldn't continue developing for Nintendo -- which have, nonethleless, announced their top RPGs for PlayStation, is a blow to Nintendo, and could upset its RPG stronghold in the marketplace.

Japanese software maker Enix Corp announced earlier this month that it would develop the latest version of the game "Dragon Quest VII" for PlayStation. The software house had previously developed Dragon Quest games only for Nintendo's 16-bit Super Famicom. In early 1996, another game software house, Square Co Ltd, said it would develop the seventh version of its mainstay "Final Fantasy" game to run on PlayStation.

Software houses were lured to the Sony camp in part because it is far cheaper to develop games for the PlayStation platform than for Nintendo 64.

"The software makers' moves were decisive in making PlayStation the market leader," said Yutaka Sugiyama, senior analyst at UBS Securities Ltd.

Although Nintendo's 64-bit machine is smarter and faster than the current mainstay 32-bit machines, it also requires software developers to use more advanced workstation computers, analysts said. Sony's aggressive thrust into the market was cited as one factor forcing Sega to seek a merger partner that could help it become more competitive.

Since its launch in December 1994, Sony's 32-bit PlayStation console has outsold its chief rivals -- the 64-bit Nintendo64 and Sega's 32-bit Sega Saturn -- both at home and abroad.

As of the end of last year, Sony had sold a cumulative total of 5 million PlayStations in Japan and another 6 million units in the U.S. and Europe.

Total sales of Sega Saturn, which hit the market shortly before PlayStation's launch, have so far reached 4.4 million in Japan and 2.76 million overseas.

Nintendo 64 racked up sales of 1.85 million units domestically and 2.14 million overseas since it was launched in June 1996.

While many analysts said the Sega-Bandai merger posed little threat to Sony's growing grip on the gameplayer market, some said the newly merged company may have a head-start in the race with Sony and other rivals to profit by linking television, videogames and the Internet.

"The merger will provide Sega certain competitiveness in next-generation game machines," said an analyst at a foreign brokerage in Tokyo. REUTER 04:37 01-24-97